CHAPTER I INTRODUCTION

Background of study:
The industrial sector time to time responds to the business environment, which is marked by rapid changes due to external pressures. Some of the factors that have increased the vitality of the competitive environment and compel the organizations of industrial sector to respond are globalization of production and markets, the rate of technological innovation and variation in consumer demands. Similarly to compete and endure in this era of globalization and technical innovation the textile industry of Pakistan needs to utilize all the available resources as means of gaining competitive advantage. It has been identified that one of the major resources for achieving competitive advantage is human resource of the organization (Pfeffer, 1995). The important competitive factors that add value to the textile industry are different segments of design, research and development (R&D). The textile industry is utilizing the human capital for the working of design and marketing segments. The human resource employed in this design and marketing segments has been facing the global challenges and responding to the external pressures (Nordas, 2004). Therefore the significance of considering human resource as basis of competitive advantage in developing countries has been realized as these countries indulge more and more in international competition. The major effort of these developing countries is to shift the base of competitive advantage from cheap labor force to high quality human resource. The major objective of firms in developing countries is to enhance their international competitive competences by increasing the effectiveness of human resources (Kaya, 2006). The important of role of human resource in developing countries like Pakistan is dominant only in knowledge based or technological

organizations (REFEREnces). The textile industry is amalgamation of both knowledge and technology but still this sector has limited emphasize on the importance of human resources and its management. The research studies have emphasized that the importance of human resource is increasing due to the postulation of the factor that employees and their management in the organization is critical to the success of that organization. There has been a need to develop best human resource management practices (hereafter, also HRM practices) in order to compete in local and globally market (Kamoche, 1996; Lado & Wilson, 1994). In recent years management scholars has emphasized on the new conceptual approach to human resource management practices that effect the organizational development. Research scholars have argued that effective and healthy human resource management policies offer organizations the path for attaining a competitive advantage (Barney, 1995). Thus recently the research studies on human resource management have been aimed at investigating the association between human resource management practices and organizational performance and how both are vital to each others existence. The human resource management practices should be observed in as many settings as possible to evaluate whether human capital is a dominant contributing factor for gaining competitive advantage. Most of the research studies in human resource management practices and organizational performance have been conducted in the West, on the management systems of American firms, with a limited number of studies carried out in England and Europe (Park et al., 2003). As discussed earlier the human resources management is evident only in knowledge or technology intensive organizations. The textile industry of Pakistan has so far limited scope of human resource management. Therefore exploring the possible effects of human resource management practices on organizational performance in a developing country like Pakistan

would be an interesting theme of research considering the two leading units of Faisalabad Pakistan namely Crescent textile (Crestex) and Masood textile mills (MTM).

Purpose of Research
The purpose of this research study is to scrutinize and explain the role of effective human resource management practices on the firms performance. The research work has focused on four major human resource management practices training, development, compensation and employee performance appraisal management. Also the study aims to compare the human resource management practices of two leading textile units of Faisalabad. Comparison would depict the comparative analysis of levels of human resource management practices in two textile units.

Objectives of Research
The main goal of this study is to contribute to the growing research stream by investigating the role of HRM practices in achieving superior organizational performance in the firms. Based on the above discussion, the objectives of this study are as follows: 1. To investigate the relationship between the employee training practices and perceived organizational performance; 2. To analyze the relationship between employee development and perceived organizational performance 3. To analyze the relationship between compensation organizational performance 4. To analyze the relationship between performance management appraisal system and perceived organizational performance practices and perceived

5. Comparative analysis of human resource management practices of two leading textile units

Significance of Research
This study will be significant for numerous textile units of Faisalabad those not have welldeveloped and synchronized human resource management practices. As this research study will enable the organizational senior management to see that how effective human resource management practices contribute more towards achievement of organizational goal. As discussed earlier the effect of human resource management practices on organizational performance has been already studied in various settings but the study of effects of human resource management practices on the performance of two leading textile units of Faisalabad will be highly warranted. The results of this study will enable other textile units to closely analyze and understand the importance of human resource management practices. Also to undertake the necessary administrative and management level policy adjustments in order to incorporate the welldeveloped human resource management system. This study will help the textile units to determine which human resource management practices are playing a major role in determining the organizational performance. This study will enable the textile units to recognize the importance of various human resource management practices in advancement of an organization in todays dynamic business world. With the help of this research study the employees will realize how human resource management practices are facilitating their work to enhance the performance of their organization. This study will also benefit students and scholars for further research in the field of HRM in Pakistan.